SPACInsider Logo
Gores Holdings IV, Inc. Files for $400M SPAC IPO
by Kristi Marvin on 2019-12-06 at 8:35am

Late yesterday evening, we had an early stocking stuffer with the IPO filing of Gores Holdings IV, a $400 million, 1/4 warrant SPAC.  So does this mean we’ve been naughty or nice?  Depends on who’s looking at it.

The headline details are that Gores IV is a carbon copy of the team from Gores III.  Alec Gores will once again be Chairman and Mark Stone will be CEO.  Additionally, Andrew McBride is back as CFO and Secretary, and the Directors of Gores III – Randall Bort, William Patton and Jeffrey Rea – are back again for Gores IV as well.

Alec Gores and Mark Stone have been the Chairman and CEO team for all three prior Gores SPACs and it has clearly been a successful pairing.  Gores I, which bought Hostess Brands (the Twinkie deal – TWNK) is currently trading at $14.07 and Gores II, which bought Verra Mobility (VRRM) is currently trading at $14.28.  Gores III (GRSH) which recently announced their combination with PAE, is trading slightly above trust, but it’s still early.  Clearly, this team knows SPACs.  And more importantly, they know how to negotiate and structure a successful SPAC transaction.  With that being said, what about the terms?

The terms are what you would expect for a top notch team, but there are a few curveballs. Notably, that 1/4 warrant, but also a few other surprises.  This is a 24 month, 100% in trust, 1/4 warrant deal, but Gores IV has also added the warrant call for shares at $10.00 term.  Albeit, without the additional $0.10 kicker that we’ve seen as of late.  Additionally, Gores IV can remove up to $750,000 a year from earned interest to fund their working capital.  Plus, no Crescent Term for this deal.

Interestingly, this is the first SPAC we’ve seen where the sponsor will be purchasing their at-risk private placement warrants at $2.00, which values the warrant at approximately $0.50 right out of the gate and keeps it better in line with 1/3 warrants deals that purchase their private placement warrants at $1.50. (Note: Conyers Park II, which also had a 1/4 warrant purchased their warrants at $1.50.  Gores IV appears to be a correction or improvement on the 1/4 warrant structure).

However, when viewed all together, these are tough terms for SPAC investors, to say the least.  But again, very much like Conyers Park II, that’s probably not the investor base they’re looking to build a book around.  To better explain, if we use VRRM (Gores II) as an example, the share is trading at $14.28 and the 1/3 warrant is trading at $4.06, so if you invested at IPO for $10.00 and held long-term, you would currently be enjoying a 56% return.  The problem for SPAC investors is, they don’t hold long-term.  And in the past, long only investors weren’t willing to take a 24-month gamble on a blank check company, hence the need for SPAC investors to fill that 24-month gap between IPO and combination close.  But when you have a consistently successful team like the Gores team, that’s a game changer for the long-only group.  However, it’s far easier to get long only investors involved when you have a sector focus, like Conyers Park (Consumer).  The Gores team has a very broad focus and can look in a variety of sectors, so the long-only crowd might be a little more challenging.

But SPAC investors will still invest in Gores IV. At least the ones who invest for the share.  And although that redemption value will be very low due to the $750K/year coming out of interest for working capital, it’s still a pretty good bet that they’ll be able to sell their position north of $10.30 come announcement time (or even earlier). The warrant, on the other hand, well…it will be very tough for warrant players to get excited about this deal, but the private placement purchase at $2.00 does help.

All told, Deutsche Bank is still pushing the envelope with terms, but in a frothy SPAC market, this deal will get done.  SPAC investors won’t be happy about it, but it’s getting harder and harder to push back with so many new investors participating.  We’ve talked before about a bifurcation of the product, but whereas before the bifurcation was about the deals, now it’s probably more about a divergence in the SPAC investor base. A topic to revisit at a later date…

It’s unclear if Gores IV will be pricing in December or January, but this is most likely a December deal.  Which, if Gores IV does price this year, that means we have a real shot at closing the year at $14.0 billion in gross proceeds raised, a big record.  Stay tuned…

Summary of terms below:

Gores IV summary of terms 12-6-19


Deutsche Banks is sole book-runner.
Weil, Gotshal & Manges LLP and Ropes  & Gray LLP are issuer’s counsel and underwriter’s counsel, respectively.
KPMG LLP is auditor.


Recent Posts
by Marlena Haddad on 2023-01-27 at 11:34am

  Below is a daily summary of links to the latest SPAC news and rumors gathered across the web.  Latest SPAC News: Circle spokesperson denies blaming SEC for failed deal, BuzzFeed CEO says AI-powered content will be part of core business, and FaZe Clan faces possible delisting Circle Spokesperson Denies Blaming SEC for Failed $9 Billion Deal...

by Nicholas Alan Clayton on 2023-01-27 at 10:00am

Health Sciences 2 (NASDAQ:HSAQ) announced that it closed its combination with Orchestra BioMed on January 26. HSAQ ahead of its vote pre-announced redemption figures of 1,597,888 shares equating to 67.7% redemptions, however, that’s still subject to change.  However, today it was noted that Orchestra BioMed is to receive $70 million in gross proceeds including $20...

by Kristi Marvin on 2023-01-27 at 7:33am

Carbon capture technology has long been talked about, and it is finally in operation with LanzaTech among the pioneers. Its plants are turning potential emissions into clothing, household goods and sustainable fuels. SPAC cash is now also an accelerant in this new process as the company announced a $1.7 billion combination with AMCI II last March. This week, we caught up with...

by Nicholas Alan Clayton on 2023-01-27 at 7:30am

In this series we’ll be examining successful SPAC deals from the past both in the terms and circumstances of their de-SPAC processes and how they have weathered the storms that have followed after their public listings with research from SPACInsider contributor Anthony Sozzi. Thirty months does not sound like that long, but it’s been a...

by Marlena Haddad on 2023-01-26 at 5:32pm

Seaport Calibre Materials Acquisition Corp. (Nasdaq: SCMA) announced this afternoon that it is pushing today’s special meeting back until January 31. The SPAC is currently facing a completion deadline of February 1, but is looking to extend its timeline by an additional six months to August 1. Stockholders may elect to redeem their shares for a pro rata...

Privacy Policy|Terms Of Use
Copyright © 2022 SPACInsider, Inc. All Rights Reserved